SENATE SPECIAL COMMITTEE ON OIL & GAS February 23, 1993 11:02 a.m. MEMBERS PRESENT Senator Loren Leman, Chairman Senator Rick Halford Senator Bert Sharp Senator Judith Salo Senator Al Adams MEMBERS ABSENT All Present COMMITTEE CALENDAR Confirmation Hearing: David Johnston, Alaska Oil and Gas Conservation Commission Norman Ingram, Alaska Clean Seas WITNESS REGISTER David Johnston, Chairman Alaska Oil and Gas Conservation Commission 3001 Porcupine Dr. Anchorage, Alaska 99501-3120 POSITION STATEMENT: Confirmation hearing. Norman Ingram, Manager Alaska Clean Seas 12350 Industry Way, Suite 200 P.O. Box 196010 Anchorage, Alaska 99519-6010 POSITION STATEMENT: Gave ACS presentation. Mike Conway, Director Division of Spill Prevention and Response Department of Environmental Conservation 410 Willoughby Ave., Suite 105 Juneau, Alaska 99801-1795 POSITION STATEMENT: Commented on ACS. Commander Page, Chief U.S. Coast Guard Marine Environmental Program 709 W. 9th Juneau, Alaska 99801 POSITION STATEMENT: Commented on ACS. ACTION NARRATIVE TAPE 93-3, SIDE A Number 001 SENATOR LEMAN called the Special Committee on Oil and Gas meeting to order at 11:02 a.m. and said it would teleconference with David Johnston for his confirmation to the Alaska Oil and Gas Conservation Commission. DAVID JOHNSTON, Chairman, Alaska Oil and Gas Conservation Commission, said it is an independent quasi judicial agency that oversees oil and gas drilling, development, production, reservoir depletion, and metering operations on all land subject to the state's lease powers. It administers the federally mandated program called the Grand Injection Control Program which has to do with injection below ground of oil and gas related waste. It also serves as a forum for resolving oil and gas disputes within and between industry. He was first appointed to the Commission in 1989 by Governor Cowper. He has a Master of Science degree in Engineering and Science Management from the University of Alaska Fairbanks and a Bachelor's Degree of Science in Geology from Montana State University. He said the commission's reservoir surveillance computer system is the most recent technological advance used to enhance reservoir monitoring. It retrieves detailed information which has greatly improved productivity. Number 100 The commission has also expanded its field inspection program. It is taking a lead in helping other state agencies carry out their statutory authorities and is sharing information about its injection control program. MR. JOHNSTON said he has wide support within industry and the Alaska environmental community. Number 144 SENATOR LEMAN asked him to comment on the commission budget. MR. JOHNSTON said he is a bit frustrated with the budget. He said he was charged with revitalizing the Commission and he thought he had been successful in doing that, but it is very hard to build programs without adequate funding. He said Alaska deserves a solidly built conservation commission. We have a tremendous role to play and it can be improved upon significantly. Number 190 SENATOR LEMAN asked if ADGCC is dealing adequately with the challenges that precipitated the resignation of Commissioner Griffin. MR. JOHNSTON said he didn't want to comment in detail since it had to do with a personnel matter. He believed in treating employees fairly and yet he is interested in work being delivered by employees commensurate with their salary. He said they were taking steps to deal with the situation. Number 221 SENATOR LEMAN noted for the record that SENATOR HALFORD had been present and would return shortly. SENATOR ADAMS moved and asked unanimous consent to confirm the appointment of David W. Johnston to the Alaska Oil and Gas Conservation Commission. There were no objections and it was so ordered. Number 238 SENATOR LEMAN introduced Norm Ingram, Manager, Alaska Clean Seas (ACS) to give his presentation. MR. INGRAM said Alaska Clean Seas is a non profit oil spill cooperative covering the North Slope area. He gave the Committee an update of the organization and briefed it on a specific project to carry out an in situ burn test this summer in Russian waters near Vladivostok. ACS had plans to hold an identical test in the Beaufort Sea, but could not obtain the necessary permits from EPA to let it happen, he explained. MR. INGRAM said ACS has 10 member companies now, three other companies had recently terminated to carry on operations in other countries. ACS' fundamental strategy is to have the initial response provided by the operator in question, no matter how small its operation. They all have the opportunity to seek secondary support from ACS directly and through their auxiliary contractor teams. They have a binding mutual aid agreement where each of the operators have agreed to assist one another in the event any one of them would have a problem. This is supported by the necessary liability indemnification provisions. Number 390 MR. INGRAM reviewed numbers of people ACS has trained for response and how many hours of training they received. ACS' primary contract is with a spill response company called VCRA. To their credit, there was an unannounced drill a year ago and rather than having the required 200 people, when the drill was called off they had 756. He said ACS has the largest inventory of its type any where in the world. The Marine Spill Response Corporation (MSRC)is in the process of setting up five depots around the United States. Each one of those centers will have 35,000 - 40,000 feet of boom which he compared to our 860,000 feet here in Alaska. He said MSRC was involved in 10 events the past year, seven of which were not in his area. Sometimes MSRC would just give advice as they did, for instance, for a spill off the coast of Africa. They provided 97 different types of courses for a total of 17,500 man hours of training. They would like to be able to assist in a third party type situation where their equipment may be used somewhere like the Aleutian Chain or Southeast Alaska where coverage is scant. All of their equipment is Hercules transportable. They have presented a contract to the state of Alaska under which that type of support could be provided. He stressed that they are not interested in competing with commercial firms. Number 492 MIKE CONWAY, Director, Division of Spill Prevention and Response, DEC, said DEC would like to have the type of arrangement where the ACS equipment would be available for DEC use. The request was taken to the Department of Law which is working out their concerns with liability and the procurement code. Number 549 MR. INGRAM said the rest of the state was very challenging in terms of its size and because of its exposure. He said a significant number of spills that happen in Alaska are on the Aleutian Chain. He said the U.S. Navy invited ACS to join a forum of approximately 10 entities worldwide to look at an international cooperative venture, including Australia and the UK, to allow a fast response network to be set up by the Department of Defense. Number 560 MR. INGRAM explained that in situ burning is a new technique, although it is very simple. When an oil spill occurs, a decision can be made quickly to ignite the oil and burn as much as possible. He said they had hoped to carry out a test of this technique in the Beaufort Sea, but could not obtain a permit from EPA. They are now hoping to carry out the test in Russia in July, 1993. TAPE 93-3, SIDE B Number 580 They plan to burn approximately one thousand barrels of crude oil in a controlled fashion over five hours, to ignite it, and then monitor a number of elements of the test. He said it is regrettable that the smoke coming off burning oil is black, because the emissions that come off crude oil before it's ignited are arguably a bit worse than when it is burned. Virtually all the components that evaporate off oil which includes things like benzene, when ignited, turn to CO2 (carbon dioxide). He said the Russians don't feel able to make any financial contributions to the program. In fact, he would like to hire some of their vessels for the program. ACS has thought the program could be funded in a three way partnership arrangement - the U. S. Government, the State of Alaska, and industry. If funding from the state will be available, they need to know before mid-March. Number 492 SENATOR SHARP asked if the location had attributes similar to those of the Beaufort Sea and Chukchi Sea. MR. INGRAM said temperature was not a big factor. If anything, colder conditions enhance the burning technique, because it tends to limit the amount of evaporation of the light end fractions coming off the oil. Other characteristics are similar. It was not their choice to go that far away for a test, but the EPA did not give them a permit to do it in U.S. waters. He thought the Russians wanted the test where it is so they could support it from their large marine base in Vladivostok. SENATOR SHARP said he was concerned with the location of the test and the fact that we are putting up all the money. Number 430 COMMANDER PAGE, Chief, Coast Guard Marine Environmental Program, said EPA's jurisdiction goes out to the end of the EEZ. They are very reticent to give permits for amounts over 50 barrels, because of the concerns of local environmental groups. He said overseas countries are much more amenable to that approach. He thought it was a promising approach and would like to have it in their tool box. MR. INGRAM said he saw this as an opportunity to be able to push the technology forward. The U.S. is bearing the cost; they are offering the state the opportunity to participate financially. This technique should be fully investigated. Number 412 SENATOR LEMAN asked when he needed to know about the state commitment and if it was critical to the project. MR. INGRAM answered that state participation is most critical, because funding has been lined up on the federal side and it looks promising from the industry side. A commitment from the state by mid-March is critical. MR. CONWAY said DEC fully supports the concept and that the funding could come from the Exxon Valdez restoration fund which has money for things like that. Number 356 SENATOR SALO asked if there had been any Japanese involvement in the discussions involving this project. MR. INGRAM said there has been no direct involvement, but that is one possible interest supporting the industry side of the funding. Number 349 SENATOR SHARP asked if the EPA would accept the test as legitimate to be used in U.S. territory? MR. INGRAM said that the acceptance is there and that EPA would supply some of the technical experts that would work on the investigation work. SENATOR SHARP said he would like something in writing from the EPA before he would throw a million dollars at it. He wanted to know if they would use North Slope crude oil for the test. MR. INGRAM said originally they were going to use it, but now that the test is so far away they would consider a comparable type of crude from Russia as an alternative. MR. CONWAY said that EPA wants to get information they need to streamline the permitting process. COMMANDER PAGE said they have endorsement of the program from the Alaska Regional Response Team and EPA is the Co- Chair of that group. COMMANDER PAGE said they have favorable endorsement from everyone in the Regional Response Teams, including EPA. Number 301 SENATOR LEMAN asked if there was anything else to come before the committee and adjourned the meeting at 12:15 p.m.